Debt Collection: What Consumers Need to Know

With layoffs on the rise, it is a wonder that credit card companies are sending more and more pre-approved credit card applications out in order to garner more customers. These credit cards are often available with high interest rates or other variable terms and conditions. Consumers use the credits cards in hard times because - frankly - they often lack a choice due to difficult financial situations.


However, the problems start when individuals fall behind on credit card payments or when the creditor's records mistakenly show that they have fallen behind, and start phone calls from debt collectors start coming in. Consumers are often overwhelmed by these calls and have no idea what to do.

The Federal Trade Commission (FTC) enforces the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive debt collection practices. The FDCPA covers personal, family, and household debts, including money owed on a personal credit card account, an auto loan, a medical bill, and/or mortgage.

Under the FDCPA, a debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them. Here are some actions that debt collectors may NOT engage in the following practices, as outlined by the FTC:

(1) Harassment. Debt collectors may not harass, oppress, or abuse individuals or any third parties they contact.

(2) False statements. Debt collectors may not lie when they are trying to collect a debt.

(3) Debt collectors are prohibited from saying:

• you will be arrested if you don’t pay your debt;
• they’ll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so; or
• legal action will be taken against you, if doing so would be illegal or if they don’t intend to take the action.

Often, debt collectors utilize these tactics because consumers are not represented by a lawyer. Further, many violations committed by debt collectors are technical violations that may not be readily apparent. However, it is imperative for individuals to know their rights, and know that they contact a lawyer for further advice.